Consider a Two-Country, Two-Commodity Model A)increase; 0

question 37

Multiple Choice

Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. If country B transfers 1 labor hour from the production of good X to the production of good Y, total world production of good Y will _____ by _____ units. $$\begin{array} { | c | c | c | } \hline \text { Productivity } & \text { Country A } & \text { Courntry B } \\\hline \text { Good X } & 1.00 & 0.50 \\\hline \text { Good Y } & 0.20 & 0.70 \\\hline\end{array}$$

• A)increase; 0.7
• B)decrease; 1
• C)decrease; 1.5
• D)increase; 0.5

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Definitions:

Quantity Supplied

The total amount of a product that producers are willing and able to sell at a given price in a certain time period.

Price Rises

An increase in the cost of goods or services in the market, often due to factors like inflation, increased demand, or higher production costs.

Equilibrium Price

The price at which the quantity demanded of a good equals the quantity supplied.

Quantity Demanded

Represents the total amount of a good or service that consumers are willing and able to purchase at a given price over a specific period of time.